Skip to Main Content

How to pay off credit card debt

Person looking at a stack of credit card bills
shisu_ka/Shutterstock
Person looking at a stack of credit card bills
shisu_ka/Shutterstock
Bankrate Logo

Why you can trust Bankrate

At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here's an explanation for . The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired. Terms apply to the offers listed on this page. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

ON THIS PAGE Jump to Open page navigation

Getting yourself out of credit card debt may be daunting, but it’s definitely possible. Many Americans struggle with credit card debt. The average credit card balance is $5,525, according to Experian’s 2021 State of Credit report. And though the national average has decreased since 2019, the COVID-19 pandemic has strained some wallets more than others.

Short of receiving a windfall, there’s no quick-fix solution for getting out of debt, despite what solicitors or infomercials might have you believe. However, a combination of smart money moves can reduce your debt, lower your interest rates and put you on the right track towards a debt-free life.

Here are six techniques for paying off credit card debt the smart way.

The avalanche method

If you want to get out of debt as quickly as possible, list your debts from the highest interest rate to the lowest. Make the minimum monthly payment on each, but throw all your extra cash at the highest-interest debt. This is sometimes called the debt “avalanche” method of repayment.

This strategy is good for saving money, since you’ll have paid the least amount of interest overall compared with other strategies, says J. Dennis Mancias, a former financial advisor with Symmetry Financial Solutions in San Antonio.

If you have, say, $600 per month you can budget for paying off debt, you would use the majority of those funds to pay off the highest-interest debt first. Once that debt is paid off, you can focus those funds on the next-highest-interest debt and eliminate it faster, since you won’t have as much interest to pay off.

“The key to this strategy is to maintain the $600 per month debt payment throughout,” Mancias says. “So, once one card is paid off, you don’t eliminate that payment, but instead roll it over to the next card to accelerate the payoff.”

Paying the most expensive balance first might be the cheapest way to get out of debt, but if you don’t end up sticking with this method, it won’t save you money.

  • Who this strategy is good for: Those motivated by interest savings.

The snowball method

With the “snowball” method, you pay off your debts from smallest to largest. Getting a debt paid off in the shortest time possible is a good motivator that could help you stay on track.

As with the “avalanche” method, you make the minimum monthly payment on each debt, then go full out on the one you’re focused on paying off. Once you’ve repaid it in full, you put the money you were allocating to it toward the next-largest debt on your list.

  • Who this strategy is good for: Those motivated by small successes.

Consider a balance transfer credit card

If you have good-to-excellent credit despite your debt—which is possible if you’ve been making your minimum monthly payments on time and keep your credit-utilization ratio low—you may qualify for a 0 percent APR balance transfer offer with a balance transfer credit card.

This zero-interest introductory offer could last anywhere from 12 to 21 months and will let you transfer your higher-interest balances to the new card. You’ll save on interest for the duration of the 0 percent period, making it easier and faster to get out of high-interest debt.

“You should always pay attention to the interest rate after the promotional period is over,” says Justin Zeidman, assistant vice president of open banking at Navy Federal Credit Union. Consider how long it will take to pay off your credit card debt in comparison to the promotional period so you don’t get stuck with a higher interest rate after the 0 percent interest period is over.

  • Who this strategy is good for: Those good at keeping track of credit card payments.

Get your spending under control

Sometimes people get into credit card debt due to unexpected medical or emergency expenses. Other times, the source of debt is chronic overspending, which often means you’re spending more than you’re saving or more than you have in your account. To gain full insight into how much you’re spending, making a reasonable budget is the next best step toward alleviating that debt.

Matt Kelly, owner of Momentum: Personal Finance Coaching in Durango, Colorado, recommends that your budget account for the following:

  • Basic necessities: rent/mortgage, utilities, groceries and gasoline
  • Obligations: minimum payments on credit cards and other debt
  • Nice-to-haves: restaurants, coffee and entertainment costs
  • Irregular recurring expenses: insurance, car repairs, tires, haircuts, vitamins, toiletries, vet bills, holiday gifts, travel, weddings and gifts

It’s the last category that often trips people up and becomes the source of credit card debt, Kelly says. “These little and not-so-little expenses go onto the card and are hard to pay off.”

Once you’ve put your expenses down on paper or entered them into a spreadsheet, go through each item and find ways to free up enough money each month to pay off all your debts in 12 to 18 months, he says.

  • Who this strategy is good for: Anyone lacking a sufficient budget.

Grow your emergency fund

If you’re one of the many Americans who don’t have significant savings, overusing credit cards is an easy trap to fall into—especially if it’s not possible to borrow from friends or family or cut back on spending.

“You have to build your savings first before concentrating on debt,” says Steve Repak, a certified financial planner and the author of “6 Week Money Challenge.”

He suggests building your short-term savings to at least $500 while making only the minimum payments on your existing credit cards before you start concentrating on your debts. That way, you can tap your savings instead of swiping your credit card if you have an unexpected expense.

“For consumers that have debt and their income isn’t high enough to save anything, they either have to reduce expenditures or increase their income, and the best-case scenario would (be) to do both,” Repak says. “Supplementing your living expenses using credit cards cannot be a solution.”

  • Who this strategy is good for: Anyone lacking a significant emergency fund.

Switch to cash

If your main goal is to pay off your credit card debt, the last thing you want to do is add to that debt by continuing to charge your expenses.

“Quit using your credit cards,” Repak says. “It seems like a no-brainer, but sometimes it is easier said than done.”

Paying with cash not only prevents you from accumulating more debt, but it can also help you spend less overall, due to the psychological act of handing over physical bills. It also requires you to plan ahead and makes certain purchases inconvenient, so you’re less likely to make them.

  • Who this strategy is good for: Anyone looking for ways to limit their credit card usage.

Debt consolidation

Debt consolidation can be a useful way to consolidate multiple lines of high-interest credit card debt under a loan with one fixed, monthly payment. You can consolidate your debts by initiating a balance transfer (like we mentioned previously). But, you could consider taking out a debt consolidation loan or even a home equity loan.

Debt consolidation can make it easier and less expensive to pay off your debt, but only if the interest rate of the debt consolidation loan is lower than the interest rates of your credit cards. Use Bankrate’s debt consolidation calculator to find out how much money you could save on interest.

Debt consolidation loans also come with a perk: If you make the monthly payments in full and on time, your credit score could see a positive impact. The best debt consolidation loans tend to carry lower interest rates than credit cards, so if you meet the qualifications, you may be able to save money on your credit card debt.

  • Who this strategy is good for: Someone with too many credit card accounts who find it hard to stay on top of payments.

The bottom line

Credit card debt can be a challenge and feel insurmountable. But armed with the necessary information to approach it, you can start to chip away at your debt. There are plenty of approaches that you can take; pick the strategies that work best for your situation.

Bankrate’s debt-management tools and resources can help you get started and guide you through the process of paying off credit card debt so you can improve your credit score.

Written by
Hanneh Bareham
Student loans reporter
Hanneh Bareham specializes in everything related to student loans and helping you finance your next educational endeavor. She aims to help others reach their collegiate and financial goals through making student loans easier to understand.
Edited by
Editor